Qualcomm (NASDAQ:) — which designs, develops, manufactures and markets digital telecom products and services — looks like the winner in the smartphone chip war, as it’s taking market share from Intel (NASDAQ:) in the Apple (NASDAQ:) iPhone 4S.
That’s not all. Its Snapdragon chip will also power Windows 8 and related devices, providing another boost to revenues. Plus, Amazon’s
(NASDAQ:) newly announced smartphone will also have QCOM chips.
Qualcomm had a solid fourth quarter report recently, with revenues rising 40% to $4.12 billion. The company gave guidance for 2012 of $18 billion to $19 billion in revenues, and $3.42-$3.62 in non-GAAP diluted EPS.
Using a midpoint of $3.52 and a stock price of $56 gives QCOM a forward multiple of just 16, which is cheap given its heady growth rate.
The stock sports a dividend yield of 1.5%, which should provide a further valuation floor for the stock. Technically, I’m looking for QCOM to break out to the upside, with the stock making new highs by April of next year at the $62 level.
Based on QCOM’s current market price of $56.38 and using a target price of $62, a target date of April 20, 2012, and $1,000 of investment capital, this is an excellent candidate for making some intermediate-term options gains by buying the QCOM April 52.50-62.50 Call spread.
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